Affordable homes for first-time buyers have disappeared from the US real estate market.
With mortgages rates near 7%, affording the record $243,000 price tag on the average entry-level home in the US is increasingly out of reach for first-time buyers — and that’s if a starter home can even be found.
First-time homebuyers must now earn $64,500 a year to ensure the cost of an average entry-level home doesn’t exceed 30% of their income, according to real estate brokerage Redfin. That’s up from $57,222 a year ago.
“Buyers searching for starter homes in today’s market are on a wild goose chase because in many parts of the country, there’s no such thing as a starter home anymore,” Sheharyar Bokhari, Redfin senior economist, said. “The most affordable homes for sale are no longer affordable to people with lower budgets due to the combination of rising prices and rising rates.”
That’s especially true in Florida, where first-time buyers seeking sunshine and low taxes are finding that the financial bar has jumped by more than 20% compared to last year. The income required to afford an entry-level home in Fort Lauderdale rose 28% year-over-year in June, and in Miami it surged 25%.
Buyers are also facing a dried-up market with few homes to choose from. New active listings are down 23% year over year, thanks in part to existing homeowners opting not to sell when sitting on record-low mortgage rates, Bokhari said. And now, the number of affordable homes on the market is less than half what was available in June 2012.
This article was provided by Bloomberg News.